Question 1

Vasquez, Inc.is establishing the direct materials and direct labor standards for its leading product.Materials cost from the supplier are $5 per square foot, net of purchase discount.Freight-in amounts to $0.10 per square foot.Basic wages of the assembly line personnel are $10 per hour.Payroll taxes are approximately 20% of wages.How much is the direct labor cost standard per hour?

Accepted Answer

A)  $5.00 per hour.
B)  $10.00 per hour.
C)  $12.00 per hour.
D)  $17.10 per hour.
E)  None of the answers is correct.

Question 2

Listed below are ﬁve variances (and possible causes)  that are under review by management of Knight Company.Which of the following is least likely to cause the variance indicated?

Accepted Answer

A)  The need to ship goods acquired from a distant supplier via overnight carrier than via common carrier truck; material price variance.
B)  The need to complete goods on a timely basis during a period of high absenteeism; labor rate variance.
C)  A work-team that is very unhappy with its supervisor; labor eﬃciency variance.
D)  The need to close a plant for two days because of blizzard conditions; material quantity variance, part no.542.
E)  A malfunctioning piece of manufacturing equipment; labor eﬃciency variance.

Question 3

Variances are computed by taking the difference between the product cost and standard cost.

Accepted Answer

A) True 
 B)False

Question 4

A direct-labor eﬃciency variance cannot be caused by:

Accepted Answer

A)  inexperienced employees.
B)  poor quality raw materials.
C)  employee ineﬃciency.
D)  an out-of-date labor time standard.
E)  producing fewer ﬁnished units than originally planned.

Question 5

Which of the following variances cannot occur together during the same accounting period?

Accepted Answer

A)  Unfavorable labor rate variance and favorable labor eﬃciency variance.
B)  Unfavorable labor eﬃciency variance and favorable material quantity variance.
C)  Favorable labor rate variance and unfavorable total labor variance.
D)  Favorable labor eﬃciency variance and favorable material quantity variance.
E)  None of the other answers are correct, because all of these variance combinations are possible.

Question 6

Most companies close their variance accounts directly into Cost of Goods Sold.

Accepted Answer

A) True 
 B)False

Question 7

A favorable labor rate variance is created when:

Accepted Answer

A)  actual labor hours worked exceed standard hours allowed.
B)  actual hours worked are less than standard hours allowed.
C)  actual wages paid are less than amounts that should have been paid for the number of hours worked.
D)  actual units produced exceed budgeted production levels.
E)  actual units produced exceed standard hours allowed.

Question 8

When considering whether to investigate a variance, managers should consider all of the following except the variance's:

Accepted Answer

A)  size.
B)  pattern of recurrence.
C)  trends over time.
D)  nature, namely, whether it is favorable or unfavorable.
E)  controllability.

Question 9

The standard hours allowed for the work performed are:

Accepted Answer

A)  5.
B)  5.14.
C)  39,000.
D)  40,100.
E)  None of the answers is correct.

Question 10

Van Buren Frames manufactures hardwood luxury picture frames.The company uses standard costs to prepare its ﬂexible budget.For the company's the ﬁrst quarter of 20x8, direct material and direct labor standards for one of their most popular frames were as follows: Materials: 1.5 board feet per unit; $4.00 per board foot Labor: 2.0 hours per unit; $18.00 per hour During the ﬁrst quarter, Van Buren produced 5,000 units of this product.At the end of the quarter, an examination of the materials records showed that the company used 7,000 board feet of materials and the direct materials cost variance was $1,750 U.Which of the following would be a logical explanation for this variance?

Accepted Answer

A)  The company paid a higher price for the materials than allowed by the standards.
B)  The company used greater quantity of materials than allowed by the standards.
C)  The company paid a higher rate for labor than allowed by the standards.
D)  The company used more labor hours than allowed by the standards.
E)  None of the answers is correct.

Question 11

Consider the following statements: I.The standard cost per unit of materials is used to calculate a materials price variance. II.The standard cost per unit of materials is used to calculate a materials quantity variance. III.The standard cost per unit of materials cannot be determined until the end of the period. Which of the above statements is (are)  true?

Accepted Answer

A)  I only.
B)  II only.
C)  III only.
D)  I and II.
E)  I, II, and III.

Question 12

The individual generally responsible for the direct-material price variance is the:

Accepted Answer

A)  sales manager.
B)  production supervisor.
C)  purchasing manager.
D)  ﬁnance manager.
E)  head of the human resources department.

Question 13

The aggregate nature of the vari ances in standard costing is a drawback in the advanced manufacturing setting that makes it diﬃcult for man agers to determine their cause.

Accepted Answer

A) True 
 B)False

Question 14

Perez, Inc.recently completed 56,000 units of a product that was expected to consume four pounds of direct material per ﬁnished unit.The standard price of the direct material was $8.50 per pound.If the ﬁrm purchased and consumed 228,000 pounds in manufacturing (cost = $1,881,000) , the direct-material quantity variance would be ﬁgured as:

Accepted Answer

A)  $34,000U.
B)  $34,000F.
C)  $57,000U.
D)  $57,000F.
E)  None of the answers is correct.

Question 15

Product costing is the process of accumulating the costs of a production process and assigning them to the completed products.

Accepted Answer

A) True 
 B)False

Question 16

For the quarter just ended, Halston, Inc.reported the following variances in one of its manufacturing departments: Material price variance, U Material quantity variance, F Labor eﬃciency variance, F Labor rate variance, negligible Machine hours eﬃciency, F The sum of the favorable variances exceeded the unfavorable materials price variance by a considerable amount.The quality of the output from the department was the same as usual.Halston operates very close to a JIT system for materials purchases, with virtually all material acquired during the quarter being used in manufacturing activities. Required: Is there any connection among these variances? If so, explain.

Accepted Answer

While a connection between these varianc...

Question 17

A statistical control chart is best used for determining:

Accepted Answer

A)  direct-material price variances.
B)  direct-labor variances.
C)  whether a variance is favorable or unfavorable.
D)  who should be held accountable for speciﬁc variances.
E)  whether a particular variance should be investigated.

Question 18

If a company has an unfavorable direct-material quantity variance, then:

Accepted Answer

A)  the direct-material price variance is favorable.
B)  the total direct-material variance is unfavorable.
C)  the total direct-material variance is favorable.
D)  the direct-labor eﬃciency variance is unfavorable.
E)  any of the other answers can occur.

Question 19

Normal defect rates in an assembly process would be considered if a company desires to establish a series of practical manufacturing standards.

Accepted Answer

A) True 
 B)False

Question 20

At the end of the accounting period, most companies close variance accounts to:

Accepted Answer

A)  Raw-Material Inventory.
B)  Work-in-Process Inventory.
C)  Finished-Goods Inventory.
D)  Cost of Goods Sold.
E)  Income Summary.

Exam 10: Standard Costing and Analysis of Direct Costs

Correct Answer
verified

The aggregate nature of the vari ances in standard costing is a drawback in the advanced manufacturing setting that makes it diﬃcult for man agers to determine their cause.

Correct Answer
verified

Listed below are ﬁve variances (and possible causes) that are under review by management of Knight Company.Which of the following is least likely to cause the variance indicated?

Correct Answer
verified

Normal defect rates in an assembly process would be considered if a company desires to establish a series of practical manufacturing standards.

Correct Answer
verified

A statistical control chart is best used for determining:

Correct Answer
verified

When considering whether to investigate a variance, managers should consider all of the following except the variance's:

Correct Answer
verified

At the end of the accounting period, most companies close variance accounts to:

Correct Answer
verified

Correct Answer
verified

Which of the following variances cannot occur together during the same accounting period?

Correct Answer
verified

A favorable labor rate variance is created when:

Correct Answer
verified

Correct Answer
verified

The individual generally responsible for the direct-material price variance is the:

Correct Answer
verified

Correct Answer
verified
While a connection between these varianc...
View Answer

Product costing is the process of accumulating the costs of a production process and assigning them to the completed products.

Correct Answer
verified

Variances are computed by taking the difference between the product cost and standard cost.

Correct Answer
verified

Most companies close their variance accounts directly into Cost of Goods Sold.

Correct Answer
verified

The standard hours allowed for the work performed are:

Correct Answer
verified

A direct-labor eﬃciency variance cannot be caused by:

Correct Answer
verified

If a company has an unfavorable direct-material quantity variance, then:

Correct Answer
verified

Correct Answer
verified

Exam 10: Standard Costing and Analysis of Direct Costs

Correct AnswerverifiedShow Answer

The aggregate nature of the vari ances in standard costing is a drawback in the advanced manufacturing setting that makes it diﬃcult for man agers to determine their cause.

Correct AnswerverifiedShow Answer

Listed below are ﬁve variances (and possible causes) that are under review by management of Knight Company.Which of the following is least likely to cause the variance indicated?

Correct AnswerverifiedShow Answer

Normal defect rates in an assembly process would be considered if a company desires to establish a series of practical manufacturing standards.

Correct AnswerverifiedShow Answer

A statistical control chart is best used for determining:

Correct AnswerverifiedShow Answer

When considering whether to investigate a variance, managers should consider all of the following except the variance's:

Correct AnswerverifiedShow Answer

At the end of the accounting period, most companies close variance accounts to:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following variances cannot occur together during the same accounting period?

Correct AnswerverifiedShow Answer

A favorable labor rate variance is created when:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The individual generally responsible for the direct-material price variance is the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedWhile a connection between these varianc...View AnswerShow Answer

Product costing is the process of accumulating the costs of a production process and assigning them to the completed products.

Correct AnswerverifiedShow Answer

Variances are computed by taking the difference between the product cost and standard cost.

Correct AnswerverifiedShow Answer

Most companies close their variance accounts directly into Cost of Goods Sold.

Correct AnswerverifiedShow Answer

The standard hours allowed for the work performed are:

Correct AnswerverifiedShow Answer

A direct-labor eﬃciency variance cannot be caused by:

Correct AnswerverifiedShow Answer

If a company has an unfavorable direct-material quantity variance, then:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
While a connection between these varianc...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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